The function ng:payloadToString('encoding') is to be used in workflows only.
It converts the payload into a string.
The encoding can e.g. be 'UTF-8' like in this example:
ng:payloadToString('utf-8')
A related function is ng:varToString().
This built-in function was added as an aid for those, that wants to call external Http(s) rest apis. If the api expects a string, then this function can be used to convert a binary payload into string. An example for how this can be used is included here.